Revlon issue jumps as maturity nears, company extends waiver; Parmalat firmer

By Paul Deckelman and Sara Rosenberg

New York, Jan. 29- Revlon Inc.'s 12% notes scheduled to mature on Feb. 1 were quoted up as much as 10 points on the session, as investors expressed confidence that the troubled New York-based cosmetics company would in fact pay off those bonds. Investors also got some good news from the company's announcement that its bank group had agreed to amend Revlon's credit agreement - essentially giving Revlon a one-year extension of the waiver of some financial covenants that it had received last year.

Elsewhere, Parmalat Finanzaria SpA's bonds were seen a little improved on the session, as the management team trying to right the company outlined some of its plans for what the "new" Parmalat might look like.

On the bank debt front, Mirant Corp. and Federal-Mogul Corp. were among the names heard trading downward in a generally heavy market, dragged down by the distressed bond market's generally lower stance.

"Everything was down - unless it was up," a distressed-debt trader quipped. "Everything you wanted to sell was down and everything you wanted to buy was up."

One issue which was certainly up was Revlon's 12% notes due 2004, quoted at 93 bid, up 10 points from recent levels.

Investors "think he [Revlon chairman Ronald Perelman] will pay off rather than default," the trader said, although Perelman's reputation of not always doing right by his bondholders seems to be keeping those bonds still below the par level one would expect from an issue maturing Monday.

The trader saw other Revlon debt, however, little changed, its 9 1/8% notes and 8 1/8% notes in the 70s and the 12% notes due 2005 at 104 bid.

"What a rocketship this [12% 2004] bond has been for people playing chicken with Perelman," another trader said, confirming that the 12s had jumped to 93 bid, 95 offered while the company's other bonds were steady. "They didn't go anywhere," he said.

Revlon, in announcing that its lender group had given it the covenant relief, said that the waiver covers covenants for its EBITDA and other measures of financial performance.

The company said that Revlon's financial covenants have been waived for the four fiscal quarters ending Dec. 31, 2003, eliminated for the first three quarters of 2004, and waived through Jan. 31, 2005 for the four fiscal quarters ending Dec. 31, 2004. The amendment also extends the maturity of the $65 million line of credit provided by 83% owner MacAndrews & Forbes to Revlon Consumer Products Corp. to June 30, 2005 from Dec. 1.

Parmalat gains

Elsewhere, Parmalat's dollar denominated 6 5/8% notes due 2008 as well as its other, euro-denominated bonds, were being quoted up one to two points in the 13 to 13.5 bid range from prior levels around 11-12.

Meantime, the stricken Italian dairy products giant's rescue management reportedly said that it is targeting a core profit margin of 7% to 8% after it is restructured and stripped of loss-making units.

Reuters, quoting a source familiar with the discussions aimed at bailing out the company, said that turnaround administrator Enrico Bondi said indicated that if underperforming units were to be cut away a profit margin of 7% to 8% could be reached.

Back in the States, Adelphia Communications Corp. debt was quoted lower, apparently in line with a fall in the company's shares that followed comments Wednesday indicating that shareholders would receive nothing from the Denver-based cabler's reorganization plan.

Adelphia's bonds "were lower across the board," a distressed-debt trader said, down about a point on the day. Its 10¼% notes due 2011 dipped to 102.25 bid, down a point on the session and two points from Tuesday's close.

Mirant loans drop

In bank debt trading, the distressed secondary bank loan market was heavier on Thursday in reaction to the bond market's fall, according to a number of traders. Some specific names that caught attention included Mirant Corp., which dropped pretty considerably, and Federal-Mogul Corp.

Mirant's bank paper traded in the 63's on Thursday, according to a trader. "It was as high as 66. It's off with the bonds," the trader added.

Mirant is an Atlanta energy company.

Federal-Mogul's bank debt only saw about a half a point drop since Wednesday's close, however the paper has been "kind of heavy for two days," a trader said.

The debt traded in the 89.5 bid, 90.5 offered context compared to previous levels of 90 bid, 91 offered, according to the trader.

"It's market skittishness. There's nothing fundamental," the trader added.

Federal-Mogul is a Southfield, Mich. vehicular parts manufacturer.

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